What a Trump Presidency Means for Your Taxes
Matthew Craw
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On Tuesday, November 5th, 2024, millions of Americans cast their votes for the next President of the United States. Donald Trump emerged victorious, winning 312 Electoral College votes to Kamala Harris’s 226, and making him the first Republican since George W. Bush in 2004 to also win the popular vote.
In an October Louis Plung & Company blog post, we compared the proposed tax policies of both Presidential candidates. With Trump’s return to office on January 20, 2025, here’s a closer look at his proposed tax plan.
The Role of Congress
Tax legislation in the United States requires Congressional approval, as only Congress has the constitutional power to create and modify federal tax laws. While the President can propose tax changes, Congress must introduce these proposals as bills, review them in committees, and vote on them in both chambers before sending them to the President for signing… In the November election, Republicans secured a majority in both the Senate and the House, giving proposed tax changes a smoother path to approval.
Proposed Policies
Many of Trump’s tax proposals focus on extending provisions from his Tax Cuts and Jobs Act (TCJA), which are set to expire at the end of 2025. While President-elect Donald Trump has expressed an interest in extending the TCJA provisions from his previous administration, it remains uncertain which specific tax laws might change under his leadership. Trump has floated new proposals aimed at reducing the tax burden on Americans, such as eliminating taxes on tips, overtime pay, and Social Security benefits. However, funding for these initiatives would need to be sourced elsewhere.
Estate Tax
In 2025, the estate tax exemption is set at $13.99 million for single taxpayers, and joint filers can exclude double that amount. However, if the current provision expires, the exemption will revert to pre-TCJA levels. Adjusted for inflation, this reduction is projected to bring the exemption down to approximately $7 million in 2026.
Trump may prioritize fulfilling new promises over revisiting an estate tax rule that primarily benefits the very wealthy. Additionally, the expiration of the exemption is already written into law, so it would require no political action. It’s worth noting that Trump had previously advocated for a full repeal of the estate tax under the original TCJA proposal, which indicates he may still hold similar views on reducing estate tax liabilities.
Given this uncertainty, it’s wise to account for both possible outcomes—whether the increased exemption is extended or allowed to expire— while estate planning to ensure readiness for any policy shifts.
Corporate Tax
During Trump’s first term as president, he reduced the corporate tax rate from 28% to 21%, and he now plans to lower the rate even further. Trump has proposed decreasing the corporate tax rate to 20% and reducing it to 15% for companies that manufacture products solely within the United States.
In addition to lowering tax rates, Trump aims to extend the 100% bonus depreciation provision, which is currently set to phase out, dropping to 0% by 2027. He also proposes restoring immediate expensing for Research and Development expenses, which, under current law, must be capitalized and amortized over a five-year period if incurred after 2021. Trump’s plan further includes a full immediate deduction for automobile manufacturing equipment, which is currently only partially deductible upfront, with the remainder depreciated over time.
Individual Tax
In addition to his corporate and estate tax proposals, Trump has put forward several individual tax changes aimed at reducing the tax burden for Americans and potentially stimulating economic activity.
One of Trump’s key proposals is to eliminate taxes on tips, overtime pay, and Social Security benefits. He also plans to extend certain provisions from his TCJA of 2017. These extensions would maintain increased standard deduction amounts, continue suspending limitations on itemized deductions, and allow specific deductions for casualty and theft losses and moving expenses.
Currently, taxpayers who itemize deductions face a $10,000 cap on state and local tax (SALT) deductions. Trump has proposed removing this cap, which would allow taxpayers to fully deduct state and local taxes on their federal returns. Additionally, he has floated the idea of allowing car loan interest payments to be deductible, a departure from current tax policy.
For residents in states affected by natural disasters, Trump has also proposed a specific deduction for home generators. Under his plan, individuals who purchase generators between September 1, 2024, and August 31, 2025, in disaster-affected areas would be able to deduct the full cost of the generator.
Through these tax proposals, Trump aims to provide targeted tax relief for individuals, which he believes will help stimulate economic growth by increasing disposable income and encouraging spending and investment.
Conclusion
In summary, Trump’s proposed tax changes aim to reduce burdens for both individuals and businesses, with a strong emphasis on stimulating economic growth through targeted tax relief. However, as these proposals depend on Congressional approval and funding, taxpayers should keep an eye on developments over the coming months. The Louis Plung & Company tax team will continue to provide updates as available, and you can also reach out to your tax advisor with questions.
